Casino to pursue asset sales to help cut debt

PARIS (Reuters) - French retailer Casino, battling investor concerns over its high debt, vowed to boost profits and cash flow in its core French market and sell off more assets under a three-year strategy plan.

Investors initially welcomed the plan before some concerns over Casino’s cash flow weighed on Casino’s shares.

Along with domestic peers such as Carrefour and Auchan, Casino faces intense price competition in its home market as well as challenges from online players such as Amazon.

The company, which had its credit rating cut to junk by Standard & Poor’s in March 2016, has embarked upon asset sales to reduce its debt and ease concerns over the financial position of both Casino and its parent holding company Rallye.

It has been selling off real estate and loss-making stores.

Group consolidated net debt was 3.4 billion euros ($3.8 billion) at the end of last year, down from 4.1 billion euros a year earlier.

Casino raised its goal for the disposal of non-strategic assets to at least 2.5 billion euros, to be achieved by the first quarter of 2020.

Casino has a joint purchasing alliance with Auchan, German retailer Metro and France’s Schiever.

It is also expanding its online offering through a deal to use UK online retailer Ocado’s platform, while its Monoprix supermarket arm has also become the first French retailer to agree to sell groceries via Amazon.

Those two partnerships are expected to help generate revenue of 1 billion euros from the sale of groceries online, up from 300 million at present.

It has also been looking to diversify revenue sources away from its core retail business in recent years.

Casino is already making money from data it holds through its ‘relevanC’ and ‘3WRegie’ units and handles power and energy sales via its GreenYellow and Cdiscount Energie units.

Casino aims to further reduce its exposure to the hypermarket retail format in France to 15 percent of gross sales by 2021 from 21 percent in 2018, while in turn opening 300 premium and convenience stores.